Excellent article, Skellie. This is the sort of advice I think many freelancers can genuinely use.

If you think that other freelancer’s rates are too high, all I have to say is, “Don’t knock it until you’ve tried it!” I mean, REALLY tried it. What may seem to you to be “rates that are higher than your clients would ever stand for” to others may seem “rates that are severely undervaluing the work you do”. Why not just give it a try (or 2 or 3) and see what comes of it? I think it’s fair to say that the primary difference between those making OK money and those making a decent living is the confidence to charge better rates.

Premise 1, 2, and 4. No 3?

And you lost me at #4 anyway. Before that, it was great advice. Trying to decouple your rates from the hours you work is a double-edged sword that you took up in an earlier article and got a lot of pushback about. If the value of what you create for the client turns out to be much higher than your hourly rates, then by all means raise your rates to match the value, but don’t do it because you have an inflated sense of what your client might value the work at. However, many projects don’t have an obvious value that you can put a price tag on, so you have to be prepared to quote for the time you work.

Wow, great article!

Skellie
A lot of good stuff there. I have for some time bid on projects using a flat fee - with a clearly defined proposal and contract in case the client starts adding features etc. On occasion, there are jobs that require an hourly rate. I don’t mind saying I have always charged existing clients $75 an hour for this work. A year ago I began quoting new clients $90 an hour. Each time I do this I lay out exactly what value I bring to them. No serious client has ever objected. I’ve learned to be very confident in the value and results I deliver. That said, you’ll never hear me say that I’m a “great” designer. There’s a lot of great work out there. I deliver professional work that communicates effectively with its intended audience. That’s all. But that’s what matters.

Your article makes one clear point that I completely agree with: that time does not equate to value. What took me 20 hours four years ago now takes 5 to 7. I would never limit my income just because my intellectual capital has risen (the reason for flat fees).

As others have mentioned, you should be careful when considering charging per service instead of per hour. It may work out in your favor many times, but there’s always an opportunity for it to backfire. You have to be wary of scope creep (where the project starts to grow after you’ve gotten into it) and other complications.

On the other hand, if you’re do 3 hours of work at $70 an hour and your client ends up making a boatload of money it doesn’t mean that you’ve lost out on anything. All you’ve done is gained a very satisfied client who is more likely to refer you to other people in his or her network.

As usual, you rock Skellie.

I might not implement this straight away, but it’s definitely filed for future reference.

I actually decided to implement a similar idea a couple of weeks ago. I put my rates up by 20% to see what would happen. The client came back to me immediately saying it was too expensive. I stuck to my guns and got the order.

I’ve also spent a bit more time designing some custom elements I would previously just used stock for. I feel the client deserves a better job for an extra 20%. So everyone wins.

@ James Chartrand:I don’t think I agree with what you’re saying, if the customer isn’t willing to pay your prices, they aren’t serious about working with you and you have no obligation to feel sorry for them, or care whether they feel embarrassed.

Great article! I’m right in the middle of finding the right price for my work, and the boldness of this article helped me make up my mind. Thanks!

This is excellent. I have recently been thinking about raising my rates too, so this is an ideal time to try this out!

I found this article to be very helpful. So much so that I’m buying you a cup of coffee ;).

It kills me that your chart shows higher rates for graphic design than web design. That’s the first time I’ve ever seen a chart where graphic design rates were higher than web design rates. I guess the market is officially over saturated.

The fact is that you can only charge as much as the market will stand. Also, clients shop if your rates are too high for them. While the thrust of your article may be beneficial for most freelancers, your point #3 is certainly misleading. As pretty good SEOs, your math is bad.

$210 is X times the amount of profit of a product. $210 is $210 in the red on a balance sheet. $210 is not $210 to the client. They have the time involved in having the work done, the cost of stocking products, bank fees, payment fees etc. As a freelancer, you’re being hired to do a job, rather than to get a %age of the client’s hard-earned income. Doing your job at a rate you’re worth, and doing your job well will keep the client coming back. Going ‘hmm, it’ll be worth $1000 to you and I want half of it’ is arrogant, lazy and out of order in a client - supplier relationship.

Just my $0.02

@James Chartrand - I tend to agree with Alex who said “I don’t think I agree with what you’re saying, if the customer isn’t willing to pay your prices, they aren’t serious about working with you and you have no obligation to feel sorry for them, or care whether they feel embarrassed.”

I understand that people price shop - especially my target audience who is churches. We all want a great deal. But what I have found time and time again is that those who aren’t serious about your services are the ones who will drain you of time, energy, and resources. While I do agree with you (James) about how some people get that “price shock” and may be embarrassed, I don’t feel sorry for them anymore because many of them have a disregard for the value of my time by not responding back.

Many sales books used to say to keep in contact with the people who ask you for bids or about your product and that the sale usually takes place after the sixth or seventh contact. This does have some validity but I tried this approach for a couple of years with no fruit. I got tired of sending e-mails, letters, and calls with no response. I would rather someone sack up and say I am too expensive and part ways than be spineless and not respond back. This is one reason I don’t do proposals or e-mail estimates anymore. If a person is willing to pick up the phone and talk, then there is larger chance they are really interested and if they can’t afford me; we both leave with our dignity intact. If I get an e-mail and one of the first thing’s they say is “how much does it cost” I thank them for their time and send their e-mail to the circular file. I know from experience where it’s going and don’t have the time to chase rabbits.

I know this may sound harsh from a business perspective but my advice to freelancers is this - there are plenty of opportunities to work with people who appreciate your time and talent. Determine your value and what you need to make you happy and stick with that. Don’t chase the rabbits that can’t be caught…let someone else chase them - it’s not worth it.

Great article Skellie. I recently raised my rates at the beginning of the year and it’s worked out well. It helped to weed out all the bad prospects always hovering around.

Nicely done, as always, Skellie. Very helpful information.

I’ve only had a few clients balk at my “standard” rate, and my response is always, “You get what you pay for.” (Ending a sentence in a preposition makes me queasy, but the point is valid.)

Only occasionally have I lowered my rate. I usually end up working out some sort of referral discount: For every client referred, I’ll knock 10%-20% off the next bill.

@ Alex and James D - I never said you should feel sorry for people who can’t afford your rates. However, having empathy that some people don’t have that kind of money is important. Case in point: I want a new sofa. I can’t afford a new sofa. Does that make me less serious as a person or someone that the retailer should look down his nose at?

I don’t think so.

The retailer/seller always needs to remember that because someone can’t afford something, they just may be budget strapped and doing the best they can. They aren’t less worthy as potential clients and they may end up coming back in six months when they do have the money to buy.

Look down your nose at them as “not serious”, and you’ve just lost a customer.

Excellent article! I’d like to add a counterpoint. The SEO example was a bad example because yes, the boost in traffic to the site is worth ‘more’, but exactly how much more? The company is taking a risk here, hoping that the traffic boost will be useful traffic. If they sell stuff for dogs, and you drive people looking for dog breed information to the site, those people may or may not remember and buy later from the company - but they didn’t get what they wanted. So how much was your time actually worth there? It’s very difficult to quantify.

This is a classic time- vs. money-risk equation. The company will accept the risk that your hits don’t actually produce a tangible boost in sales, in exchange for you doing the work at a rate commensurate with that risk. IE, you make money now, and they hope to make money later. It’s not a guarantee for them.

I’m not saying charging a fair price isn’t a good idea, just that there are many cases (and SEO is one of them) where these equations aren’t so simple. Most clients aren’t going to understand this anyway, but it’s worth thinking about.

This is a good place to add value through clever negotiation. If you are SURE 3 hours of your time is going to produce that return, then you should offer options. Suggest, for instance, that your price for the work is $1,000 up front. OR, the client can pay $100 now to cover “expenses”, and if you produce at least a 10% boost in revenue as shown by Web server logs (which you will be provided access to), they will pay you $2,500. That revenue boost is worth well more than that, the $100 roughly covers your time anyway, and you have the chance of a much higher payoff for doing EXACTLY the same work.

Thanks for the comments everyone — I’m glad the article seems to have been helpful and struck a positive note.

@ James Chartrand: I disagree with you on this one. I think any serious client (meaning a client who is seriously interested in you) who can’t afford your rates will come back with a counter-offer more in line with their budget. A complete non-response, to me, indicates a client who has sent out a whole bunch of emails and is looking for the best price, without taking particular interest in who they’re emailing.

I’m also not sure how forgetting about a client who doesn’t respond to your email will ‘lose a customer’ — that assumes that there was some way to turn them *into* a customer in the first place, which is probably not a fair assumption. If they balk at your rates so much that they don’t even send a return email, it seems that turning that around would involve a big price drop, which is really against the spirit of what I’m advocating here. You just can’t turn every prospect into a client — and if you try to cater to everyone who shows a smidge of interest, I think you’ll end up doing a lot of work you don’t want to do, at inadequate prices.

Anyhow, thanks for your thoughtful contribution (as always).

Absolutely amazing article.

I charge way more than what my competitors do ( My work is way better as well). But generally when clients use such arguments as my peers charging half my price, I just stick to my price with unshakable confidence and just use the argument of “You can take your lunch at a road-side motel. And you can take your lunch at the Le Meridian. I would like to leave it to you where you prefer to go. Ofcourse, the Le Meridian will cost more”. Generally, all serious clients end up in my favor.

One topic I see brought up on FSwitch articles - but never any hard data - is how to calculate these intrinsic values for jobs that are worth more to your client over an hourly rate (or a flat-fee based on an hourly rate).

How does one determine the value you are adding to a clients bottom line with your work? I’ve always thought of it more along the lines of a license or usage approach: the bigger the company, the more usage they will be getting out of your creations, therefore the rates are higher.

I’d like to see more tangible and specific information about how those who calculate ‘value’ into their fees arrive at their numbers.

I had been thinking about giving myself a raise recently, and this article has really bolstered my confidence in doing so. The one last thing that bothers me is that I get a lot of work from ongoing clients. In fact, I could even be considered a part time employee of one firm; they send me regular work on a weekly basis, and we just recently came to a bi-monthly payment arrangement. I don’t think I’d dare try to raise my hourly rate with them, even though I’d like to. Any advice?

Even the obvious needs to be stressed several times. Great article and I like how you are inferring the whole time to never lower your own value all the while.

Totally like the article!!! Awesome…. great info..